Archive for the ‘Trade Review’ Category

It took me a little while to post a trade review on FCX cause I had to lick my wounds and heal a bit before revisiting this one. Needless to say I got my ass kicked on this one. On this position I pretty much maxed out my risk tolerance (no more than 2% of total portfolio whereas on most other trades I limited it to around 1%) After breaking out of its flag on 12/16 I went long at 56.87 (split adjusted) and it worked right off the bat. This may have been my undoing in that it gave me lot of confidence in my decision. After a modest pull back and short consolidation it ran to new 52 week highs. Then earnings hit. While I wasn’t blown away by their report, I didn’t think it deserved being shellacked received and held on as it had not yet hit my stop of a split adjusted $50. Unfortunately my stop was hit and I lost 11.88% overall on the trade. FCX appears to be bouncing since being stopped out but this bounce may be short-lived. Until it takes out the descending trendline resistance established since making new 52 week highs I’d wouldn’t consider a long position for a while.

EDZ on the other hand, is a trade I’m very happy with. I initially entered it as a hedge to my long exposure and I couldn’t be happier with the way it turned out. As I described earlier, EDZ is the triple inverse to the EEM which appeared to be weaker than the S&P and not making new highs but under performing. This divergence lead me to EDZ and since my entry, it had traded as I expected it too. Pull-backs in the S&P were complimented by strong and sustained surges in EDZ. Rises in the S&P resulted in only a relatively modest amount of selling in EDZ. That changed though in the past week or so and a bit of divergence appeared. EDZ would spike along with drops in the S&P but they were not really as sustained as the selling in the S&P. This became obvious in the failure of EDZ to hold a breakout above the descending trendline. After seeing this divergence along with the quick drop in Oil and Gold, it seemed to me that the EEM may be settling down for the time being. I don’t know it the unrest is over but if it appears that it isn’t I wouldn’t hesitate to re-enter if it is able to hold the ascending trendline as another hedge to my longs. Exited the position with a 16.6% gain which almost wiped out my loss on my FCX trade.

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Talk about a trade I almost completely screwed up. If there’s a reason for documenting your trades this is it. It is important to remember your winners but it’s just as important to remember your losses and mistakes.

The chart to the left has quite a few notes on it and I’ll try to go through them all and try to make sense of them for you. My initial entry was a prudent entry as it appeared that it was going to resume its rally after pulling back and appearing to form a base from $25.25 to $25.50. It didn’t seem to want to enter the gap so I made my entry at $26.37 and the next day it dropped rapidly. I was fearing a gap fill so I set my mental stop to a close below $23.50 but it didn’t meet that criteria. over the next couple of weeks it rallied close to my target of $30.24 which was based upon a 161.8 fib retracement from the swing high to that low. It popped up to $30.20 and I sold a small portion at that pop just to lighten up my long exposure (was looking a bit heavy here at the time) but didn’t sell cause it didn’t hit my target. Thinking it would hit it the next day, I held on. Certainly it would hit in the next day or two…..but no. It fell back down into a multi-week consolidation. I was quite frustrated at this point but frustration turned to optimism as it rallied back up to the $30 area. It was trading well at this level and I felt comfortable walking away for a meeting. When I returned a couple of hours later it certainly had hit my target….and then dropped back down. Like a fool I hesitated closing under $30 because I wanted to close it on my target. You can see what happened over the next seven days. My frustration doubled and after nearly getting stopped out I closed the remaining position for just about a 2% loss over all. I let a few pennies get in the way and turned what would have been over a 13% gain.

Maybe I’ll add “Don’t be a Dick for a Tick” or “Don’t Trip over Dollars to Save Pennies” to my trading rules.

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It’s been one of my longest holdings since I started this blog and one of my more profitable ones but I decided on Tuesday, February 2nd to close out my long DFS position. I went long on 7/22/10 at 14.91 and exited on 2/1/11 at 20.85. Along the way I sold two call positions for a net profit of .35/call and bought a put position that I let expire for a .10/put loss. Over all my profit was about 41.5%. I bought it in anticipation of a channel break out but was willing to play the possibility of it riding out the channel by selling calls to off set any draw downs. The first call I sold was very successful but the second I sold was prior to the channel breakout but luckily I bought it back before I lost too much money. DFS broke out of it’s channel and never really looked back.

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So last week I pointed out that I had been keeping an eye on Cotton futures and expected them extend their gains into all-time highs and wanted to play it via the Cotton ETF BAL.

This is one of the more planned out trades I had undertaken and fortunately for me, it worked out very well nearly exactly as I had expected it to…..after I had changed my target and stops once I had already entered it and switched to plan B. That would be my biggest failure of this trade. Changing my plans after entry, though ultimately proving profitable, could have been disastrous.

Initially I wanted to play the cup and handle formation with a lofty target of just over 200 but after seeing how BAL traded on January 25 I decided it was not a traded I cared to stay in too long right now. Cotton had been trading at near all time highs and actually finished up on the day but BAL finished down. I wasn’t too fond of the way this played out so I switched to plan B.

Another set up I like is when all time highs are hit, a pull back and then consolidation followed by another push to all time highs. I established a target of the 161.8% retracement from the all time highs to the consolidation lows. This worked out to be target of $172.45 with a stop at the 61.8% retracement near $150.

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BIDU was the trade I really wanted to get into. Since December of 2008 BIDU has simply been on a tear running from a split adjusted $10 to a recent high of $115.

Finally saw an entry with good risk/reward on 10/6.

BIDU had a nice, strong run up and was flagging with a nice pull back and support around $95. Went long at $98.25.

It traded very well, never dropping down too close to my initial stop. Stayed in the channel and came a couple of points to within my initial target of $117. Until it fell out of the channel on heavy volume. I had high hopes but but didn’t want to fall in love with it and let it take me down so I closed out the position for a 4% gain. Despite leaving so much on the table I would classify this as a good trade. Stuck to my stops, exited the trade with when it didn’t trade well and walked away with a profit. I can alway re-enter if it sets up again but maybe the BIDU it stalled and will correct for a time. Healthy growth.

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RIG was a trade that I wanted to keep a tight leash on since there was still a good chance of issues popping up with the Deepwater Horizon disaster. RIG broke through resistance on 9/27 and pulled back to retest on 10/4 and I long on near the close.

Peeled off half right around while making new trade highs and was looking for a re-test of previous support near 78-80. I really didn’t like the way it traded after the Justice Department announced its lawsuit on 12/15 so I closed the position for a 13.7% gain on the trade.

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So it’s a bit late but I want to continue to review my trades as much as I can so that I can learn from them. I was stopped out of my remaining MOS position on 9/30.

Trade Entry: MOS had appeared to bottomed out on 7/1 and was rising with an ascending triangle that it broke out of on 8/2. Entered a full position on that day anticipating to take profits around 8-10% and let the rest ride until I was taken out with a Chandelier Trailing Stop.

Trade Management: I was doing well in the trade when BHP announced it’s offer to buy out POT w/ a decent premium to where it had been trading. This lifted almost all the Ag Fert stocks significantly so I sold half of my position into that strength for a 13% profit on half. I kept my trailing stop in place as planned and on 9/28 MOS started selling off and continued for the next couple of days. I checked my stop which read 58.11 on my tracking sheet but that didn’t seem right. I was using a 3 x ATR and it should have been tracking up with the high. I checked my calculations and a link had broken and the stop didn’t get up dated. It should have been 60.85 and I should have been stopped out. The previous day. I placed my stop beneath it’s intraday swing low on 9/30 and that was taken out. I was planning on taking profits prior to MOS earning release so that I did not risk losing profits already made and even though MOS is currently trading at 61.66 I’m glad I’m out. Could have easily gone the other way.

Must keep an eye on spread sheets to make sure they are up-to-date and working properly.

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So CRM was one of the market leaders that have been selling off the past week and I was stopped out for a 4% loss on the trade.

Entry: CRM had pulled back to a 50% fib retracement from it move on 8/31 to 9/9 and bounced well. Went long at $116.87 and wanted to give it a bit of room so I set my mental stop around $112.

Trade Management: While I managed my trade within my plan, such as my stop, I did not include any specific profit targets in my plan. I simply went by feel and did not sell into that rise like I probably should have. I used the Fib Retracements to get and I could have used a Fib analysis to get a target.

By drawing a Fib Retracement from the highs of 9/9 to the lows of 9/15 you ‘ll get your standard 38.2, 50, 61.8 & 100% retracements but there are also some Fibonacci’s that are above 100 that can give you a set profit target. From drawing your Fibs you can also plot the 127.2 and 161.8 extensions which can be used as profit targets. It’s hard to tell from this chart but the 127.2 lands almost exactly on the highs of 9/20. Taking half off there and moving stop up to break even would have made me a small profit instead of the 4% loss I had.

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I was stopped out of the second half of my position in DNDN this afternoon after shares started tumbling on the release of voting questions were posted on the Center for Medicare & Medicaid Services website. “The questions ask the panel members to use a 1-5 scale to identify their confidence level in Provenge’s ability to improve overall survival, control disease related symptoms and lessen the burden associated with cancer therapy, among other questions.” Check out an article written by Adam Feuerstein on TheStreet.com for more information regarding this development.

For me, it doesn’t really matter why there was a sell off in this trade. I didn’t enter the trade based upon Provenge data or any other real fundamental reason. It was primarily the technicals that I entered the trade and technicals that took me out of the trade.

Entry: Entered with a full position on 8/19 after it had popped up over the 200 day SMA on huge volume and on a pull back to trendline support.

Trade Management: Initial stop loss was set beneath the 200 day SMA and I almost got stopped out but it ultimately held. On 9/2 DNDN spiked and I took off half the trade for a gain of 8.79% and moved S/L to no less than break even. At this point I wanted to let the trade ride out to and close the position with a trailing “Chandelier Stop”. I’ll write a post about the specifics later but it is based on a multiple of the Average True Range. For this trade I chose a 2 times daily ATR stop and today that stop was hit at $40.38 and I was filled at $40.35.

Overall I’m happy with the trade and the 8.4% profit. Disappointed that I did get out only 4 cents above the lows and it appears that this was just an over-reaction by the markets but I stuck to my trading plan, exited with a nice profit and will move to a new position. If I were to change anything I may review my multiplier on the Chandelier Stop to about 3 to better account for the volatility in something like DNDN seeing that this appears to be just a whip-saw but hindsight is 20/20.